Who this is for: For founders who want to exit without paying CGT, preserve the business culture, and give their team a genuine stake in the outcome.
An Employee Ownership Trust (EOT) sale is the only exit route that is entirely exempt from CGT for the selling shareholders. No BADR. No SSE. No CGT at all.
The conditions are specific. The EOT must acquire a controlling interest (more than 50%) in the company. The company must be a trading company or the holding company of a trading group. All employees must be entitled to participate in the EOT on the same terms.
How the EOT pays the founder
The EOT does not pay the founder upfront. It pays over time, from the company's future profits. The founder receives deferred consideration, typically over three to seven years, funded by the company's trading profits.
This means the founder's exit proceeds are dependent on the company's future performance. If the company underperforms, the founder receives less. The EOT structure is not suitable for founders who need immediate liquidity.
The tax efficiency
The CGT exemption applies to the full gain, not just the first £1m. On a £10m gain, the saving versus a standard CGT disposal is £2m. On a £20m gain, it is £4m.
The company can also pay employees a bonus of up to £3,600 per year free of income tax, which can be used to fund the deferred consideration payments to the founder through a salary sacrifice arrangement.
The EOT is the only exit route where the founder pays zero CGT on the full gain. The conditions must be met before the sale completes.
| Exit route | £10m gain | CGT payable | Founder receives |
|---|---|---|---|
| Trade sale (no structure) | £10m | £2,000,000 | £8,000,000 |
| Trade sale (BADR) | £10m | £1,900,000 | £8,100,000 |
| EOT sale | £10m | £0 | £10,000,000* |
*Paid over time from company profits; subject to future performance.
What the planning looks like
An EOT sale requires a valuation of the company, a trust deed, a sale agreement, and HMRC clearance. The process typically takes three to six months. The planning must start before the founder has agreed terms with any other buyer, because the EOT must be the acquiring party.
Your Exit Architecture
The structure has to be in place before the buyer is in the room. Not during the process. The Capital Architecture maps your exit route, the qualifying window, and the exact steps required to make the transaction tax-free. It is delivered within 48 hours of your intake call.
The Capital Architecture includes your exit route analysis, the SSE qualifying window, and the full implementation roadmap. Delivered within 48 hours.
The EOT Is the Expansion Layer
An Employee Ownership Trust exit is an Expansion-layer outcome. Zero CGT on the disposal, a legacy for the employees, and a succession mechanism that does not require a trade sale. It is one of the most structurally elegant exit routes available to a UK founder.
What makes an EOT exit work is not the trust itself. It is the constitutional architecture that was in place before the trust was established, the holding company structure, the share class design, and the governance framework that determined how the business was valued, how the consideration was structured, and how the trust was constituted.
The Stability layer does not create EOT eligibility. The Growth layer begins to. The Expansion layer is what makes the EOT exit a designed outcome rather than a transaction that happens to qualify, the constitutional architecture that was built before the exit, not assembled during it.